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Interior, Pentagon Faulted In Audits

When CIFA needed office space in Northern Virginia, Defense officials turned to Interior's GovWorks program instead of the GSA, which manages office space for the government, the audit said. GovWorks awarded a 10-year, no-bid deal worth $100 million to a private company based in Anchorage to acquire and manage the space, the auditors said.

The auditors said Defense officials violated regulations by not using the GSA for their office space.

"CIFA and DOI circumvented numerous laws in contracting for leased space," the auditors said. "By not following the proper procedures, they entered into a lease without the legal authority to do so."

Auditors found that the lease cost taxpayers up to $2.7 million more than it should have. Auditors also found that the deal violated procedures because it was not cleared by the House Permanent Select Committee on Intelligence and the Senate Select Committee on Intelligence.

In May, members of the Defense inspector general's office told senior CIFA staffers that they could be in violation of the law if they continued to make payments on the lease.

"Subsequently, we learned that CIFA had continued to make lease payments, totaling $2.9 million," the auditors wrote.

The auditors referred the matter for possible criminal investigation to the deputy inspector general for investigations.

Weimer, Interior's policy and budget chief, disputed the auditor's findings on the lease arrangement. In his written response, he argued that CIFA did not have to go through the GSA to obtain the office space. Weimer also said CIFA did not enter into an improper lease because the lease was between CIFA's contractor and the managers of the office building. Moreover, he said, the chief counsel for the Justice Department's Foreign Terrorist Tracking Task Force advised CIFA that the arrangement was appropriate.

The other arrangement that received sharp criticism from the auditors involved the Open Market Corridor, an online buying program billed as a way to save tax money.

Built by a California company, the Open Market Corridor began as a research project for the Naval Postgraduate School in Monterey, Calif. In 2002, management of the contract was handed to officials at Interior's Fort Huachuca operation. The California company, the Naval school and Interior all received a small percentage when the system was used to order goods and services.

Auditors found that select companies were favored, in violation of federal regulations. The contracting officer responsible for overseeing the online purchases "was unable to provide a list of either the customers or participating vendors who were using the system," the auditors said.

Sixteen vendors "appeared to be Government employees or firms that appeared to be affiliated with Government employees," another apparent violation of regulations and a possible violation of federal criminal statutes, auditors said.

One official who processed 1,616 "contract actions" worth nearly $135 million was a lecturer at the Naval school who did not have the authority to award government work.

Senior Interior officials were not even "aware that the system existed" or that it was processing tens of millions of dollars in deals each year without approval, the audit said.

In March, after auditors reported the abuses, officials at the Naval school took the system offline.

The auditors concluded that Defense should not continue to manage or use the Open Market Corridor "because of the serious legal and other problems we found."

They referred their findings to the deputy inspector general and the Navy Acquisition Integrity Office for further investigation.

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